6 ms·

Could someone explain how the US could be in a recession? Isn't it that people have more money now and they are looking to spend (which is causing inflation to

• TAForObvReasons 5y ago
  If people have 10% extra money but the costs of food and rent/housing and basic goods is up 50%, the purchasing power eroded and economic activity in real terms will drop.
  • anm89 5y ago
    That is not the definition of a recession as far as the fed is concerned. It has to do with documenting sustained periods of decreasing GDP
    • TAForObvReasons 5y ago
      NBER generally determines the start and end dates for recessions, and real factors are given more consideration: > Because a recession must influence the economy broadly and not be confined to one sector, the committee emphasizes economy-wide measures of economic activity. The determination of the months of peaks and troughs is based on a range of monthly measures of aggregate real economic activity published by the federal statistical agencies. These include real personal income less transfers, nonfarm payroll employment, employment as measured by the household survey, real personal consumption expenditures, wholesale-retail sales adjusted for price changes, and industrial production. There is no fixed rule about what measures contribute information to the process or how they are weighted in our decisions. In recent decades, the two measures we have put the most weight on are real personal income less transfers and nonfarm payroll employment. https://www.nber.org/research/business-cycle-dating https://www.nber.org/research/business-cycle-dating
      • anm89 5y ago
        Fair enough. I stand corrected.